Merrill Lynch, meanwhile, recommended that investors underweight technology over the long term due to worries about spending and economic growth.

Tech stocks could do well in the short term because of optimism ahead of second-quarter results, Merrill said, but added that "economic momentum is negative and may hurt tech spending later."

The Dow managed to post a gain on a big jump in shares of GM .

The Nasdaq fell 13 to 2063, the S&P lost 2 to 1198, and the Dow added 9 to 10,512. Volume declined to 1.64 billion shares on the NYSE, and 1.43 billion on the Nasdaq. Advancers led by a few issues on the NYSE, and while decliners held a 15-14 edge on the Nasdaq. Upside volume was 51% on the NYSE, and 34% on the Nasdaq. New highs-new lows were 144-24 on the NYSE, and 88-35 on the Nasdaq.